Atop a hill overlooking Loeha Raya, a cluster of villages on the shores of Lake Towuti, on the Indonesian island of Sulawesi, all that can be seen is green. For kilometres around, the hills are covered in leafy pepper plants, roughly two metres high, growing in neat rows reminiscent of a vineyard, their tiny fruit slowly ripening and turning red, at which point thousands of workers will harvest them, laying the peppercorns out to dry in the hot Southeast Asian sun.
Down at the lakeside, where lumbering ferries dock from the town of Sorowako, across the water, the idyllic calm of the pepper fields is nowhere to be found, however. Large posters greet arrivals with angry slogans: “Reject mining,” “Save our village” and “Defend agricultural land!”
At the jetty of Tokalimbo, anti-mining signage conveys the local sentiment towards mining companies. The poster on the right reads, 'the host will not negotiate with the thief who wants to steal its land.'
Since 2023, two mining companies have acquired much of the land around Loeha and begun exploration work, hoping to find more sources of a mineral that has transformed Indonesia’s economy and is powering the electric-vehicle revolution around the world: nickel.
Resistant to heat and corrosion, nickel has long been used as plating to protect other metals, or to create alloys such as stainless steel. More recently, it has emerged as a key ingredient in lithium-ion battery cells, with some boosters framing the silvery metal as the next oil.
murat yÜkselir / the globe and mail, source: nusantara atlas; Minerba One Map Indonesia; openstreetmap
If nickel is the oil of the 21st century, then Indonesia wants to be its Saudi Arabia. With the largest nickel reserves in the world (along with Australia), Indonesia already accounts for 55 per cent of global mine production. This is only expected to expand, even as nickel prices, which spiked in 2022 amid excitement over the EV market, have crashed in the years since, and are not projected to recover any time soon due to oversupply, driven in large part by a flood of production coming out of Indonesia.
Since 2020, Indonesia has banned the export of nickel ore, forcing companies to refine the metal domestically and driving a wave of foreign investment under a process known as “downstreaming” championed by outgoing President Joko Widodo, popularly known as Jokowi.
Today, much of the sector is dominated by Chinese companies, which have built dozens of smelters across Indonesia, mainly on the eastern islands of Halmahera and Sulawesi. That Chinese ownership is controversial in Indonesia, with complaints about lax safety standards and companies employing imported workers. Affected communities have also protested the loss of agriculture jobs from the rapidly-expanding nickel business and its impact on the environment.
While most Indonesian smelters churn out low-quality nickel pig iron, which is mainly used for producing stainless steel, others take advantage of a process known as high-pressure acid leaching (HPAL) to produce battery-grade metal. Discovered decades ago, HPAL was once seen as too expensive and too difficult for widespread use, before technical innovations by Chinese companies and the rising price of nickel (ahead of the recent crash) made investment worthwhile.
In HPAL, ore is mixed with acid and subjected to extremely high temperatures and pressure, separating waste material from sulphates that can be used in EV batteries. This process requires a huge amount of energy, which at present is extremely carbon intensive: Almost all the nickel smelters on Sulawesi are powered by captive coal-fired power plants, the fuel stored in vast black piles, some the size of the factory buildings themselves.
HPAL also produces large amounts of waste in the form of corrosive chemical tailings, which are difficult to dispose of and, when not stored correctly, can result in chemicals seeping into local water supplies.
This makes HPAL sites hugely controversial and subject to resistance from local communities. In 2021, Brazilian mining giant Vale SA sold its stake in a multibillion-dollar HPAL project in New Caledonia, amid protests in the French Pacific territory over repeated chemical spills from the site.
Vale has long played a major role in Indonesia’s nickel industry. In 2006, the company acquired Sudbury-based Inco Ltd., which has had a presence in Indonesia since the 1920s. The company’s open pit mine in Sorowako, officially opened in 1978 by then Indonesian dictator Suharto, is among the biggest in the world, producing 64,100 tonnes of nickel in 2023. Led by Inco, now known as Vale Base Metals, companies with ties to Canada have invested almost a billion dollars in Indonesia’s mining sector since the early 2000s, according to the Asia Pacific Foundation of Canada.
Earlier this year, the Indonesian government became the majority shareholder in PT Vale Indonesia (PTVI), a joint venture between Indonesia, Vale Base Metals and Japan’s Sumitomo Corp. that operates smelters and mines across almost 120,000 hectares’ worth of concessions on Sulawesi.
The peppercorn farms that dot the lush landscape in Loeha Raya are under threat by nickel mining exploration carried out by PT Vale Indonesia and PT Paramos Rezeki Indah.
It was PT Vale, along with the smaller Indonesian company PT Paramos Rezeki Indah, that bought up much of the land surrounding Loeha, part of a 70,566-hectare concession that spans from the northern shores of Lake Towuti to nearby Lake Matano, which abuts the town of Sorowako and Vale’s vast mine and smelter.
The Sorowako mine has already had a dramatic effect on the people of Loeha. In the 1970s, back in the Inco days, the company built a hydroelectric dam on a nearby river, resulting in a rise in the water level that flooded rice fields, wiping out the community’s main cash crop.
“They couldn’t do rice farming any more,” said local Ali Kamri Nawir. “To this day we’re still fighting over compensation.”
Julio Gama, a spokesman for Vale Base Metals, said PTVI continuously monitors hydropower facilities to ensure safe water levels.
The loss of rice farms forced the community to look for other crops, eventually settling on pepper, which Indonesia exports $244-million worth of a year. Most farmers in Loeha work fields of less than 10 hectares, but in interviews, they said this is more than enough to sustain a middle-class livelihood, paying for new houses, cars and for their children to go to university.
Lismar, a 49-year-old who farms four hectares at the very top of a hill overlooking Loeha, said he could expect to make upward of $80,000 a harvest before costs. Some larger farms rake in millions, and employ thousands of seasonal workers from across Indonesia.
After working on a coconut farm in southeast Sulawesi, Lismar, 49, and Harijan, 41, decided to relocate to Loeha after seeing the success of pepper farms in the area.
That was how Lismar, who like many Indonesians goes by a single name, ended up in Loeha. He and his wife, 41-year-old Harjan, used to work on a coconut farm in southeast Sulawesi, but decided to relocate to Loeha after seeing how comparatively well-off the owners of even tiny pepper farms were. For several years, the couple worked for another farmer in return for the land they now administer themselves.
Such arrangements are informal: Many people and communities across Indonesia do not own legal title to the land they have lived on and farmed for centuries. This can lead to disputes and accusations of land grabs when companies purchase the supposedly uninhabited land from the government, with the new owners often accusing traditional users of squatting or illegal farming.
In response to questions about land ownership from The Globe and Mail, Mr. Gama said “unlawful settlement and encroachment have persisted for several years within the PTVI concession area, where land has been cleared for the purpose of farming and illegal mining activity.”
From top left, peppercorn farmers Resni, 35; Andra, 42; Hasmah Kaso, 42; Abdullah, 32; Ahmad Rifai, 27; Irham, 40; Yunita, 25; Nurlan, 63; Wiwiana, 41; Agus Salim, 47; Kalman, 45; and Halip, 38. Many local farmers feel the nickel mining activity is a direct threat to their livelihood, as well as a destructive force to the local environment.
He said PTVI complied with Indonesian law and regulations and “pledged to prioritize workers in the affected operational areas to safeguard against income displacement from community farming activities.”
Harjan is a member of the Loeha Raya Women Fighters (LRWF). Around 24 per cent of farmers in Indonesia are women, and the LRWF has played a driving role in pushing back against nickel exploration in Loeha.
“If we don’t do this, we could lose our livelihoods,” LRWF leader Hasma Kaso said in an interview, seated with dozens of other farmers who had gathered for a communal dinner at a house in Loeha. “We don’t want to become like Morowali.”
Located in eastern Sulawesi on the shores of the Banda Sea, Morowali is – depending on one’s perspective – either a poster child for nickel’s economic benefits, or a prime example of the industry’s dark side.
The village of Labota is home to Indonesia Morowali Industrial Park (IMIP), a Chinese-funded nickel mining company. IMIP is one of the largest companies that process nickel in central Sulawesi, and it's a critical part of the supply chain for Chinese and Western EV makers.
While small-scale nickel production has taken place in eastern Sulawesi for decades, it really took off in 2013, when Indonesia’s Bintang Delapan Group struck a partnership with a Chinese company, Tsingshan Holdings Group, to create what is now the Indonesia Morowali Industrial Park (IMIP), a sprawling $20-billion, 4,000-hectare complex that employs some 80,000 workers across mines, smelters and HPAL facilities, as well as related businesses that include an airstrip and shipping port.
Today, Tsingshan is the world’s largest nickel producer, and IMIP is a critical part of the supply chain for Chinese and Western EV makers. Huayou Cobalt Co. Ltd., a Chinese company that operates a major HPAL facility at IMIP, counts among its customers General Motors Co., Ford Motor Co. and Audi AG, as well as Chinese EV dynamo BYD Co. Ltd. and Chinese battery maker CATL (Contemporary Amperex Technology Co. Ltd.), which supplies Tesla Inc., BMW and numerous other leading EV makers.
IMIP made headlines late last year after a smelting furnace exploded on Christmas Day, killing 21 Chinese and Indonesian workers. According to IMIP, the furnace was not operational and was undergoing maintenance when “residual slag” came into contact “with flammable items,” causing the furnace walls to collapse and the remaining steel slag to flow out. A preliminary government probe blamed the accident on violations of safety procedures and negligence; police investigations are continuing.
Following the accident, Indonesia’s Ministry of Energy and Mineral Resources said it “diligently supervises” safety at nickel sites.
Hendrik Foord Jebbs, 31, works for Indonesia Morowali Industrial Park and is chair of SBIPE, a mining industry workers union that is fighting for better working conditions at the facility.
While the deadliest incident so far, the Christmas Day explosion was not the first fatal accident at IMIP, nor was it a particular surprise to workers, who have long complained about lax safety standards and lack of training, said Hendrik Foord Jebbs, an IMIP employee and chair of the Mining and Energy Industry Labor Union, which is known by its Indonesian initials SBIPE.
“There are many problems,” Mr. Jebbs said. “Most workers are not well trained, the machinery is old, there are a high number of accidents. When we point out problems, like machines being broken, they just tell us to make do. Every day I see accidents.”
Workers often trade gory videos of accidents and deaths, many of which also circulate online, a dark counterpoint to promotional videos put out by nickel companies and effusive reports in the Indonesian media about the benefits of the industry. Nor are Indonesian workers the only ones affected; last year, three Chinese workers sued IMIP over alleged inhumane working conditions.
IMIP did not respond to a request for comment.
Mr. Jebbs spoke to The Globe in a small roadside cafe in Bahodopi, an area of Morowali near the main IMIP site. While mining companies and the government often speak of the prosperity they are bringing to communities such as those in eastern Sulawesi, many of the roads in Bahodopi are poorly maintained, full of dangerous potholes and prone to flooding and traffic jams, while most buildings are hastily erected shacks, surrounded by trash, more reminiscent of a slum than a supposedly thriving town. Despite the huge coal-powered power plants dotting the region, local businesses cannot access this energy, many relying instead on noisy, gas-powered generators.
“It makes us question the President’s brags about added value through mining,” Mr. Jebbs said, gesturing outside. “Where does the money go? You can’t see it in Morowali.”
This sense of unfulfilled promises is even more pronounced for those residents of Morowali who are not involved in the nickel trade, but who have seen it transform their town, often destroying existing businesses as agricultural land is given over to industry or poisoned by pollution.
According to the Central Sulawesi Mining Advocacy Network (JATAM), an NGO, there has been an increase in poverty in areas of the island where the nickel industry is most present, with Morowali now among the poorest parts of Sulawesi. JATAM blames this on a reduction in alternative forms of employment, with nickel often becoming the only industry in town and locals forced to compete for jobs with people from other parts of Indonesia.
Nickel extraction might involve relatively small amounts of metal, but getting to it often results in whole sides of mountains being carved out and green forests turned into scars of red soil that are everywhere around Morowali. When it rains, mudslides are common, while huge amounts of silt and other byproducts often seep into rivers and the sea, staining the water red all along the coast. Emissions from the smelters and the coal plants that power them has devastated air quality in Morowali, with residents often forced to wear face masks and many complaining of respiratory issues.
While travelling across Sulawesi, The Globe encountered several landslides that blocked roads or made them difficult to pass, and drove past one large mining and smelting area where there was scant vegetation for kilometres around, just huge empty patches of red dirt, including next to a signposted “View Point,” replete with flags from the Indonesian mining company PT Teknik Alum Service.
The Globe requested an interview with the Indonesian government for this story, but did not receive a response. In the past, Luhut Binsar Pandjaitan, Indonesia’s Co-ordinating Minister for Investment Affairs and a major driver of the country’s nickel strategy, has refuted claims Jakarta overlooks environmental concerns, and he accuses Western countries and activists of “lecturing” the developing world.
The area in and around Indonesia Morowali Industrial Park has many well-paved roads and businesses that cater to the thousands of workers employed at IMIP and other nickel sites, though the benefits of the industry's prosperity are not equally distributed, according to some locals.
In the town centre of Morowali, some of the wealth of the nickel trade is visible, with grand government buildings and company headquarters, well-paved roads and numerous businesses that cater to the thousands of workers employed at IMIP and other nickel sites.
But the benefits are not equally felt, said local vegetable seller Safaat.
“In other parts of Indonesia, people from Morowali are seen as rich,” he said. “But the fact is it’s not true. People from outside came here to do business and we couldn’t compete.”
Mr. Safaat recently joined protests against a Chinese nickel-mining company that was seeking to expand its footprint in Morowali, despite lacking an environmental impact assessment. Such behaviour is common, said lawyer Rifiana, who was helping protesters deal with the company and police. Many companies illegally evict people from their land, relying on the fact that even if the government forces a company to give it back, it will no longer be suitable for agriculture and so the original owners will agree to sell it at a discount.
From left, Rahman, Rifiana, Safaat and Hamdan have been involved in protests against a Chinese nickel-mining company that was seeking to expand its footprint in Morowali, despite lacking an environmental impact assessment.
“The government promises us a prosperous life,” Rifiana said. “In reality, what the companies are doing is dirty and cruel. They evict people or buy the land promising jobs, and then never deliver.”
While the Indonesian government has hailed the economic benefits of the nickel trade to the country at large, she said many local communities are only seeing negative effects.
“Almost everywhere in the country people scream out in frustration,” Rifiana said.
Nor are the macroeconomic benefits of nickel guaranteed. Indonesia’s strategy of dominating the global nickel market by essentially driving every other major player out of business has contributed to the plummeting price of nickel, with no signs of an imminent rebound.
Mr. Jokowi’s downstreaming strategy, which he hopes will see Indonesia producing many of the batteries that power EVs around the world, not just components, is heavily reliant on Chinese investment and partners. That’s a boon to breaking into that country’s battery market, but a factor which could hamper Indonesian exports elsewhere.
Morris Garage cars, the MG4EV and MG Cyberster, are the first EV roadsters presented in Indonesia during 2024 GAIKINDO Indonesia International Auto Show (GIIAS) in July.
Onlookers gather around electric vehicles during the 2024 GIIAS. While the global market for EVs continues to expand, so has the demand for nickel-free battery chemistries.
In May, Washington introduced a 100-per-cent tariff on Chinese EVs, and a 25-per-cent tariff on batteries. Three months later, Canada followed suit, with Prime Minister Justin Trudeau defending the move as vital to protecting the burgeoning Canadian EV sector.
The United States has also raised concerns about alleged forced labour in the Indonesian nickel industry, with reports of Chinese labourers recruited under false pretenses, their passports confiscated on arrival in Indonesia and their movement limited.
Even if Indonesia can thread this geopolitical needle and become the Saudi Arabia of nickel, it may find the world moving past its key resource far faster than oil. While the global market for EVs continues to expand, so has the demand for nickel-free battery chemistries.
Lithium iron phosphate (LFP) batteries, which don’t use nickel, are already the dominant technology in China, the world’s biggest EV market. Tesla, Toyota Motor Corp. and Hyundai Motor Co. have all announced plans to shift to LFP batteries for their vehicles.
While nickel batteries are prized for high-performance cars, owing to the batteries’ superior energy density and range, LFP is more suited to mass-market vehicles for which cost is a major consideration, said Matt Stock, product director with Benchmark Intelligence
For now, nickel batteries remain the dominant technology in the European Union and U.S., where LFP battery supply chains don’t yet exist. Mr. Stock said China has a much lower cost base for LFP, making it difficult for Western automakers to compete in the technology, while increasingly protectionist stances in the U.S. and elsewhere discourage Western companies from sourcing Chinese LFP batteries directly.
Back in Loeha, The Globe asked farmers how they felt about potentially losing their land for a resource that Indonesia is already producing too much of, and that may soon lose its global lustre, returning to being used primarily for making stainless steel and coins.
“It’s sad and it’s a mistake,” said Mr. Nawir, who wore a T-shirt he picked up as a souvenir from the presidential palace in Jakarta, after leading a protest there. “Jokowi is very obsessed with downstreaming, but the fact is our country is a tropical country, we should be focusing on the development of agriculture. Instead, they’re going to take away our farms even as the price of nickel goes lower and lower.”
The hope in Loeha was that the community’s difficult-to-access location – primarily reachable by ferry – will make resistance easier, buying time for nickel prices to fall and the two nickel companies there to question their investment. The farmers point out that they are not asking for the companies to give up their entire concession, but merely to carve out an area equivalent to roughly 10 per cent of it, to protect existing agricultural land.
“We will give everything we have,” Mr. Nawir said. “We’re optimistic that we will win this fight.”
For this story, The Globe and Mail’s Asia correspondent, James Griffiths, along with Indonesian journalist Dera Menra Sijabat and photographer Joshua Irwandi, drove more than 1,200 kilometres across the Indonesian island of Sulawesi, visiting nickel mines, smelters and affected communities. With additional files from Niall McGee in Toronto, Reuters and the Associated Press.